I am new to cryptocurrencies so if there is something I said isn't true please let me know.
To win a Bitcoin you must mine a new block, and the chances to be successful are pretty low. That's not bad because it is distributed equally based on with how much computational power you mine. So for example, if you have a 20% of the total computation power mining you are going to produce a block every five (in the long run).
But if your chances are low, for example, 0.01%, you will produce one block every 10000 blocks. Estimating that the average time to produce a block is ten minutes you will have a block every 100000 minutes or 1666 hours (in reality there are lower chances, I am not sure). The problem with this is that there is people who needs to get cash daily to live, therefore they can’t waIt so long to get the money so they stop mining to stop paying the electricity that cost to run all the computers. Which in consequence produce transaction to be much slower, therefore getting us back to the problem for the one that some people choose Bitcoin (cryptocurrency) over Dollar (tradition bank, physical currency).
So it would be better if you would get a part of the reward for collaborating with the mining more than only if you were the one to produce it, and for that reason, mining pools were invented.
The problem with mining pools is that to solve what I mentioned above and get bigger chances to produce a block there should be a small quantity of them. And if this happens the control of mining stop being decentralized and starts being centralized, having a new kind of ‘banks’ controlling the flow of transactions in Bitcoin (cryptocurrency).
- Is Bitcoin, or will be in the future, after all centralized?